The Accountants Role in the Organization

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Accounting Discipline Overview
Managerial Accounting measures, analyzes and
reports financial and nonfinancial information to help
managers make decisions to fulfill organizational
goals. Managerial accounting need not be GAAP
compliant.

Financial Accounting focus on reporting to external

users including investors, creditors, and governmental
agencies. Financial statements must be based on
GAAP.

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Major Differences Between
Financial & Managerial Accounting
Managerial Accounting Financial Accounting

Communicate financial
Purpose Decision making
position to outsiders

Primary Users Internal managers External users

Focus/Emphasis Future-oriented Past-oriented

Do not have to follow GAAP; GAAP compliant;

Rules
cost vs. benefit CPA audited
Ultra current to very long Historical monthly,
Time Span
time horizons quarterly reports
Behavioral Designed to influence Indirect effects on
Issues employee behavior employee behavior
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Strategy & Management Accounting
Strategy specifies how an organization matches its
own capabilities with the opportunities in the
marketplace to accomplish its objectives
Strategic Cost Management focuses specifically on
the cost dimension within a firms overall strategy

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Strategy & Management Accounting
Management accounting helps answer important
questions such as:
Who are our most important customers, and how do we
deliver value to them?
What substitute products exist in the marketplace, and
how do they differ from our own?
What is our critical capability?
Will we have enough cash to support our strategy or will
we need to seek additional sources?

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Management Accounting and Value
Creating value is an important part of planning and
implementing strategy
Value is the usefulness a customer gains from a
companys product or service

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Management Accounting and Value
Value Chain is the sequence of business functions
in which customer usefulness is added to products
or services
The Value-Chain consists of:
1. Research & Development
2. Design
3. Production
4. Marketing
5. Distribution
6. Customer Service

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The Value Chain Illustrated

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A Value Chain Implementation

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Key Success Factors
The dimensions of performance that customers
expect, and that are key to the success of a company
include:
Cost and efficiency
Quality
Time
Innovation

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Planning & Control Systems
Planning selects goals, predicts results, decides how to
attain goals, and communicates this to the
organization
Budget the most important planning tool
Control takes actions that implement the planning
decision, decides how to evaluate performance, and
provides feedback to the organization

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A Five-Step Decision Making Process in
Planning & Control
1. Identify the problem and uncertainties
2. Obtain information
3. Make predictions about the future
4. Make decisions by choosing between alternatives
5. Implement the decision, evaluate performance, and
learn

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Management Accounting Guidelines
Cost Benefit approach is commonly used: benefits
generally must exceed costs as a basic decision rule
Behavioral & Technical Considerations people are
involved in decisions, not just dollars and cents
Different definitions of cost may be used for different
applications

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A Typical Organizational Structure and
the Management Accountant

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Professional Ethics
The four standards of ethical conduct for management
accountants as advanced by the Institute of
Management Accountants:
Competence
Confidentiality
Integrity
Objectivity

2009 Pearson Prentice Hall. All rights reserved.

 2009 Pearson Prentice Hall. All rights reserved.